Shire CEO to Retire in 2013; Bayer’s Ornskov Gets Top Job

By Andrea Gerlin -
Oct 25, 2012

Shire Plc (SHP) said Bayer AG (BAYN)’s Flemming Ornskov will take over as chief executive officer of the world’s
biggest maker of attention-deficit disorder drugs, following the
retirement of Angus Russell next year.

Ornskov is chief marketing officer and global head of
strategic marketing for general and specialty medicine at Bayer,
Dublin-based Shire said today in a statement. The company, which
has management offices in Basingstoke, England, also reported
third-quarter profit that missed analysts’ estimates.

The executive takes over a company with a market value of
almost 10 billion pounds ($16 billion) and annual sales of $4.2
billion, built by Russell with more than two dozen acquisitions
since 1999. Russell, 56, has been with Shire for 13 years and
has worked in the pharmaceutical industry for 32 years.

“When I joined it, we were this little specialist company
that was like others, reformulating” medicines, Russell said on
a conference call with journalists. “That became a model that
wasn’t sustainable. Then we got into rare genetic diseases. Now
we’re forging our own way.”

Ornskov’s Career

At Bayer, Ornskov presided over growth in the company’s
Aspirin brand and fought challenges to the Yasmin group of
contraceptives. Danish by birth and a doctor by training, he
studied business at INSEAD in France and earned a master’s
degree in public health at Harvard University. He has headed the
cardiovascular and diabetes franchise at Novartis AG (NOVN) and led
biotech companies in the U.S. and in Denmark before taking a job
at Bausch & Lomb Inc. He joined Leverkusen, Germany-based Bayer
in June 2010.

“Flemming is an excellent successor and I’m confident he
will lead the company into its next era of growth,” Russell
said on the call. Ornskov will be based at Shire’s U.S. offices
outside Philadelphia.

Russell, who got married last year, said he doesn’t expect
to take on another executive role.

“One of the major issues is spending more time with my
family,” Russell said. “I have many interests, both business
and non-business.”

Chairman Matthew Emmens said Russell has “turned his head
toward race cars and family. He wants to go play. We appreciate
what he’s done.”

Executive Search

Shire began its search for a new president for its
specialty pharmaceuticals business in April, and wanted to hire
a candidate who could be a successor to Russell, the company
said today.

“We are a bit confused by this disclosure given it
appeared that Angus was still very much engaged in the business
and had been a key component in the transition/creation of the
current Shire,” Cowen & Co. analysts led by Ken Cacciatore
wrote in a note to investors. “The explanation given at this
point is the business is expanding further and more aggressively
into international markets in which Ornskov has
significant experience.”

Shire plans to buy back as much as $500 million in shares
after ending the quarter with more than $1.3 billion in cash.
The repurchasing program won’t limit the company’s ability to
make acquisitions, the company said. Shire is seeking purchases
in the areas of rare genetic diseases, blood disorders,
neurodegenerative diseases, gastrointestinal illnesses,
regenerative medicine, diabetes and skin repair.

Acquisitive Company

“We will continue to be an acquisitive company,” Emmens
said on a conference call.

Earnings per American depositary share, excluding some
items, rose to $1.36 from $1.28 a year earlier in the third
quarter, Shire said in a separate statement. The average
estimate of 12 analysts compiled by Bloomberg was for profit of
$1.46. Revenue was little changed at $1.1 billion, compared with
the average analyst estimate of $1.16 billion. Currency
fluctuations reduced reported sales by $28 million, Chief
Financial Officer Graham Hetherington said.

Royalty Forecast

Royalties and other revenue for the full year will be about
15 percent to 20 percent lower than last year, compared with a
previous forecast of 25 percent to 35 percent, Shire said.

The results put Shire on track for earnings growth of at
least 10 percent this year, which the company predicted it would
achieve when it announced second-quarter results on Aug. 1.
Shire expects product sales to increase by about 12 percent in
2012.

“Shire’s growth has slowed because of generic competition
to Adderall XR showing that it does face some of the issues
facing big pharma,” Mick Cooper, an analyst at Edison
Investment Research in London, said in an e-mailed statement.
“However, the underlying growth remains strong and Angus
Russell will be leaving Shire in a very strong position.”